Car finance compensation: who can claim, and by when

What the scheme covers

Between 2007 and 2024, a great deal of UK car finance was sold with a commission arrangement between the lender and the dealer that the customer was never told about. The best known is the discretionary commission arrangement, where the dealer could choose your interest rate within a band and earned more the higher they set it.

Discretionary commission was banned in January 2021. The scheme runs nearly four years past that ban because two other arrangements were not banned and are also in scope. This is the part most coverage misses, and it is why a 2023 agreement can still qualify.

In October 2024 the Court of Appeal ruled (in Johnson v FirstRand Bank, Wrench v FirstRand Bank, Hopcraft v Close Brothers) that commission paid by a lender to a dealer without adequate disclosure was unlawful. The Supreme Court narrowed the framework in July 2025. The regulator then published Policy Statement PS26/3 confirming the redress scheme.

Who qualifies

Three things need to be true.

1. You took out a regulated motor finance agreement on a vehicle: a car, van, motorbike or campervan. Personal Contract Purchase, hire purchase and conditional sale all count.
2. The agreement started between 6 April 2007 and 1 November 2024. The regulator splits this into two schemes, one for agreements up to 31 March 2014 and one for 1 April 2014 onwards, and they run to different timetables.
3. You were not told about at least one of the three commission arrangements above.

You do not need to prove the third point. The scheme puts the burden on the lender to identify which agreements were affected and to contact you. The regulator counted 32.9 million car finance agreements written between 2007 and 2024 and expects 12.1 million of them to qualify, so a little over a third.

How much you might get

The regulator's published estimate is an average of around £830 per affected agreement, drawn from a pot of about £7.5 billion across 12.1 million agreements. Your own number depends on the size of the loan, the rate you actually paid, the rate you should have paid, and the term of the agreement. The average is not a promise, and plenty of people will get less.

If you had several finance agreements over the period (a new car every three years on a personal contract purchase, for example), each one is assessed separately. The £830 is an average per agreement rather than per person, so someone with three qualifying agreements is in the scope of the scheme three times over.

Why nothing is being paid yet

On 2 July 2026 the Upper Tribunal, the court that hears challenges to FCA decisions, suspended parts of the scheme, on terms the regulator agreed with the four firms challenging it. The regulator's own wording is that until the legal process ends, lenders do not need to calculate or pay compensation to people owed money under the scheme.

Two things are worth being clear about, because a lot of coverage has blurred them. The scheme has not been cancelled. And the parts that were not suspended still bind lenders, with the regulator supervising compliance.

The four firms challenging it are CA Auto Finance UK Ltd, Consumer Voice Ltd, Mercedes-Benz Financial Services UK Ltd and Volkswagen Financial Services (UK) Ltd. The challenge is listed to be heard either from 14 to 18 December 2026 or from 16 to 26 February 2027, with judgment expected in the months following the hearing. Until then the practical position is that you can complain, your complaint counts, and payment waits. Nobody can give you a payout date, and our page on checking a claim free goes through what that means in practice.

How to claim it yourself

Once the legal position clears, the lender-led process is meant to run like this:

1. Lenders write to affected customers with the calculation and a redress offer. You should receive a letter or email by post, or via your online lender account.
2. You compare the offer to your records (the original agreement if you have it, or the data you can request via a Subject Access Request).
3. You accept, ask questions, or reject. If you reject, you can escalate to the Financial Ombudsman free of charge.
4. Accepted offers are paid by the lender. No payment timetable is running while the scheme is suspended.

The official starting point for the scheme is fca.org.uk/consumers/car-finance-complaints. If you are not sure who your lender was or how to reach them, the FCA publishes a searchable list at fca.org.uk/consumers/car-finance-complaints/list-lenders, with the complaint route against each name.

What to do now

The single most useful thing is to complain to your lender, in writing, even though nothing is being paid at the moment. The regulator's own advice is that if you have concerns, the best thing you can do is complain to your lender.

Three other things are worth doing while you wait.

• Make sure your lender has your current address. The whole scheme runs on lenders finding customers. If you have moved since the agreement, update it in the online account or by phone. This is the cheapest thing on this page and the one most likely to cost someone their money.
• Gather your records. The original agreement, plus bank statements showing the monthly payments. If you have nothing, send the lender a free Subject Access Request and they have one month to give you everything they hold on you.
• Do not assume you are out of scope. The most common mistake now is thinking this only covers agreements up to 2021. Discretionary commission was banned then, but the other two arrangements were not, and the scheme runs to November 2024.

A note on claims management firms

The regulator has been unusually blunt about this. Its own guidance says you do not need to use a claims management company or a law firm to take part in the scheme. It is set up so the lender does the work and contacts you.

Car finance is the single biggest target for claims firms in the UK right now, and the fees are the same shape as everywhere else. We have written up what claims companies actually charge if you want the numbers before deciding.

The traps people fall into

• Assuming personal loans count. A bank loan you used to buy a car is not motor finance and is outside the scheme. Only PCP, HP, and conditional sale agreements qualify.
• Worrying about the dealer's role. The dealer you bought the car from may be long gone. The scheme works off the lender's records, not the dealer's.
• Signing up to multiple CMCs. Some firms send marketing that looks like an FCA letter. If you have already appointed a CMC, the lender may withhold the offer pending the CMC processing it, slowing things down.
• Waiting to be found. Lenders only have to go looking for people who never complained where those people are potentially owed money, and nothing is being worked out at all while the suspension holds. Complaining yourself is what removes the uncertainty.
• Treating the offer as final. If the calculation does not match what you would expect, you have a right to ask the lender to explain it and to escalate to the Financial Ombudsman if you are not satisfied. The FOS service is free.

How Untap helps

Untap does not read your agreements or look anything up for you. Our one-off wizard asks a few questions about when your finance ran and what you have already done, then tells you whether you are in scope and what the next step is. We do not file the complaint or accept an offer for you, and we never take a percentage. The FCA built the scheme to be free, and we are not going to mess with that. If you want the free checking routes in one place, they are on how to check a car finance claim free.

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